Over the last decade, the Eastern Caribbean Currency Union (ECCU) macroeconomic performance has deteriorated relative to the rest of the Caribbean. Tourism accounts for three-fifths of exports, and the import content of consumption and investment is high. The ECCB-operated quasi-currency board arrangement (CBA) has continued to deliver price and exchange rate stability. The region has strong social indicators, but poverty, health, and crime remain concerns. Despite the implementation of ambitious revenue reforms, limited progress has been made toward fiscal consolidation. Credit has continued to expand rapidly.
CARTAC, the second of the regional technical assistance centers, was created with singular emphasis on ownership of technical assistance by the beneficiary countries. To this end, it was structured as a UNDP project with the IMF as Executing Agency and with a Steering Committee empowered to give strategic guidance to the program and select its senior staff from short lists provided by the IMF. With the spread of the RTAC modality, the IMF has sought to bring the Centers' activities within the ambit of overall resource planning for technical assistance, ensure consistency with the institution's view on priorities for technical assistance in the countries concerned, and tighten quality control through backstopping. This has created the potential for conflict with the relative independence that CARTAC has enjoyed from its inception. The conclusion in this report, however, is that alignment with the IMF does not necessarily undermine country ownership and that the Steering Committee can play a pivotal role in defusing any tension that may arise.
transfers for current international transactions.
VIII. Last Article IV Consultation : St. Lucia is currently on the 12–month cycle. The last Article IV consultation was concluded by the Executive Board on December 21, 2005. The relevant documents are IMF Country Report No. 06/325 and IMF Country Report No. 06/326.
IX. Technical Assistance (January 2006–August 2007) : Several missions from the Caribbean Regional Technical Assistance Center (CARTAC) have visited St. Lucia since the beginning of 2006. In the area of public finance , CARTACconsultants assisted the
. While a government can expand a tax base and impose new charges, ultimately the yield comes from changing the culture of those already enforcing tax compliance and administration to ensure that those who are expected to collect do, in fact, collect. The authorities are working very closely with CARTAC here to develop a UK DFID-financed program for strengthening capacity at the Customs and Inland Revenue Departments. An important success factor of this initiative is to have the technical expertise on the ground. As such, the CARTACconsultant is moving to Antigua and
payments and transfers for current international transactions.
VIII. Last Article IV Consultation: St. Lucia is currently on the 12-month cycle. The last Article IV consultation was concluded by the Executive Board on September 26, 2007. The relevant documents are IMF Country Report Nos. 08/67 and 08/68.
IX. Technical Assistance (September 2007–July 2008): Several missions from the Caribbean Regional Technical Assistance Center (CARTAC) have visited St. Lucia since September 2007. In the area of public finance, CARTACconsultants assisted the authorities in
ECCB to undertake consistent macroeconomic projections. As a result, the primary focus of CARTAC’s MAC TA is to build capacity in macroeconomic analysis, forecasting and performance monitoring within the ministries of finance and central banks. CARTACconsultants worked with small teams across the ECCU to prepare macroeconomic projections under a baseline scenario; identify imbalances and formulate policy measures to address them; and prepare a framework to monitor the key quarterly targets of the program.
Over the last year, CARTAC has focused its efforts at
up on the April mission.
In August 2003, a CARTACconsultant reviewed work being done by the Central Statistical Office, especially in regard to the compilation of a supply and use table.
In August 2003, St. Lucia participated in a CARTAC regional workshop on regulation of trust service providers for Caribbean supervisors.
In June 2003, CARTAC sponsored St. Lucia’s attendance at Toronto Leadership Training Course and subsequent OSFI workshop on insurance supervision.
In May and July 2003, CARTAC gave training in Balance of Payments concepts and methods to
This 2003 Article IV Consultation highlights that after a contraction in GDP of more than 4 percent in 2001 and only a marginal expansion in 2002, the pace of economic growth in St. Lucia accelerated in 2003 to 3.7 percent, driven by a rebound in tourism of close to 17 percent. Despite the pickup in growth, the overall economic situation remained difficult in 2003, as an ongoing recovery in the tourism sector has not spilled over to the whole economy. Unemployment remained high, and bank credit to the private sector is declining.
St. Lucia faces structural challenges that need to be addressed to raise growth durably and reduce poverty. Implementation of planned tax reforms is important to achieve fiscal sustainability. The government’s plans to accelerate tourism-related public investment carry significant risks. Competitiveness is a challenge, and structural reforms need to be accelerated to raise the economy’s growth potential. Strengthening the supervision of the financial sector is another priority. St. Lucia is one of the most disaster-prone countries in the world. Economic and social statistics need to be improved.
This 2005 Article IV Consultation highlights that economic activity in the Eastern Caribbean Currency Union (ECCU) has accelerated since mid-2003 owing to an acceleration of activity in the tourism and construction sectors. Inflation has been stable and monetary aggregates have been expanding rapidly, reflecting continued growth in the demand for money and confidence in the banking system and the quasi-currency board arrangement. Against this background, Executive Directors have called for strengthening fiscal consolidation, lowering the debt ratios, and ensuring the consistency of fiscal policies with the currency board arrangement.